Nigeria Proposes Direct African Currency Payment Card to Bypass Dollar Dominance, Boost AfCFTA Trade
The Federal Government of Nigeria has put forth a significant proposal for the development of a cross-border payment card designed to facilitate direct transactions between African currencies, thereby circumventing the reliance on intermediary currencies such as the U.S. dollar. This initiative, championed by Nigeria’s Minister of Finance and Coordinating Minister of the Economy, Taiwo Oyedele, aims to streamline payment infrastructure and bolster intra-African trade under the auspices of the African Continental Free Trade Area (AfCFTA).
During a meeting with a delegation from Mastercard in Abuja, Minister Oyedele articulated the strategic imperative for enhanced payment systems. He highlighted that the current architecture for cross-border card transactions within Africa predominantly routes through third-party currencies, leading to a cascade of conversions and escalating transaction costs for businesses and consumers alike. For instance, a transaction initiated in Ghanaian cedis by a Nigerian cardholder would typically undergo conversion to U.S. dollars before a subsequent conversion to Nigerian naira, incurring additional fees and potential exchange rate losses at each step.
Minister Oyedele expressed optimism that Africa’s payment ecosystem is poised for a transformative leap, enabling direct currency-to-currency settlements across the continent. “We hope that, for example, we have a payment card that you can use to pay from naira to Kenyan shillings, to South African rand, without a third currency. And we know you can make it possible,” he stated to the Mastercard representatives. The elimination of intermediary currencies, he posited, would not only enhance operational efficiency but also significantly strengthen economic integration among African nations.
Beyond the cross-border payment card initiative, Minister Oyedele also urged Mastercard to spearhead efforts in expanding access to credit card facilities within Nigeria. He underscored the persistent limitations in consumer credit availability, even for individuals in high-income brackets and senior government positions, noting, “Based on my own personal experience, one of the areas where we hope you will take the lead is just making credit cards available to Nigerians. It is difficult, even for someone at my level, to get a credit card.”
Acknowledging Nigeria’s burgeoning fintech sector, the Minister pointed to substantial opportunities for further growth. He noted that Nigeria is home to five of Africa’s nine fintech unicorns, a testament to the country’s increasing influence in the continent’s digital finance landscape. “Our fintech sector is quite developed, but we know that we can do much better. We can be much bigger,” he remarked, adding, “It is interesting to know that Africa has nine unicorns, and five of them are in Nigeria. So we know that the possibilities are even bigger.” The government reiterated its commitment to fostering a stable and investor-friendly environment through consistent policy implementation and robust regulatory support, assuring potential partners of its readiness to collaborate.
This proposal emerges against a backdrop of projected substantial expansion in Africa’s cross-border payments industry. A report by Oui Capital forecasts the continent’s cross-border payments market to surge from an estimated $329 billion in 2025 to approximately $1 trillion by 2035, reflecting a compound annual growth rate (CAGR) of 12%. This growth trajectory is anticipated to be propelled by increased fintech adoption, wider mobile money penetration, expanding intra-African trade, and the effective implementation of the AfCFTA. However, the report also identifies persistent challenges, including fragmented financial systems, multiple currency conversions, high transaction costs, and settlement inefficiencies, which continue to impede seamless cross-border transactions. Industry observers concur that direct settlement mechanisms between African currencies hold the potential to significantly mitigate these frictions, thereby reducing costs for businesses and consumers and accelerating continental economic integration. The Federal Government’s proposal is thus aligned with broader strategic objectives to deepen intra-African trade and cultivate a more interconnected African economy through advanced financial infrastructure.
